Suit Seeks To Oust Upi Chairman

Sale Of Ailing Wire Service Termed ``imminent``

WASHINGTON — The chief stockholders of United Press International filed suit Thursday seeking a restraining order that would remove Luis Nogales as chairman of the wire service.

The move came as the lawyer who filed the suit said ``a sale (of UPI) is imminent.``

Although UPI officials did not name any potential buyers, sources said they could include Reuters, the British news service, and McGraw-Hill Inc., a diversified publishing and communications firm.

Filing of the suit ``clears the way for the sale`` of Media News Corp., the holding company that owns UPI, ``without interference from third parties,`` said Douglas Ruhe, one of the principal stockholders. He joined in the suit with his partner, William Geissler.

New York attorney James Harrington, representing the two, said Ruhe ``has been negotiating with several potential purchasers of the company during the past three weeks.``

Maxwell McCrohon, UPI editor-in-chief, said the wire service has persuaded publishers to accept a 9.9 percent rate increase, and that it appears further planned layoffs can be avoided.

Harrington said Ruhe and Geissler are seeking ``a judicial declaration``

that a March 7 agreement in which they ceded operating control for 120 days to Nogales ``has been terminated.``

The request for the restraining order, filed in Delaware Chancery Court in Wilmington, created new confusion for the 78-year-old wire service. In recent weeks it has been hit by severe financial problems that led to filing of Chapter 11 bankruptcy proceedings and by a power struggle between Nogales and the owners.

It was unclear whether Vice Chancellor Joseph Walsh, who scheduled a hearing for Friday, would act on Ruhe and Geissler`s request or defer to a federal bankruptcy judge in Washington who is supervising UPI`s operations under Chapter 11. The court petition was kept under seal Thursday.

The issue was clouded because the agreement affects Media News Corp., the holding company, while it is UPI that is in Chapter 11. Nogales is chairman of both entities.

Ruhe and Geissler own 83 percent of the stock of Media News Corp. They named Nogales president in last September but fired him in March. He was reinstated five days later at the insistence of Foothill Capital Corp. of Los Angeles, UPI`s chief cash lender.

Under an agreement signed by the two sides after marathon negotiations, Ruhe and Geissler agreed to yield voting control of their stock for 120 days, or permanently if Nogales could negotiate a settlement with creditors that would allow the company to operate.

Members of Nogales` team have accused Ruhe and Geissler of channeling millions of dollars in scarce company funds into poorly conceived ventures and of reneging on a pledge to invest $2 million in UPI. Nogales recently told reporters, ``If owners could be fired for incompetence, they should be fired several times.``

Ruhe has denied the allegations, saying that while he and Geissler may have made mistakes, many of the ventures failed because of ``incompetence`` by the Nogales team.

A lawyer for Ruhe and Geissler told a bankruptcy judge at a hearing last week that Nogales has blocked efforts to sell the company. Nogales, however, said the Los Angeles investment firm of Bear Stearns has been carefully evaluating all potential bidders for UPI to ensure that they have the capital and background needed to run the company.